Words by Yanis Varoufakis

Every regime has its legitimizing story.

Let’s look at capitalism.

The story was that nobody likes capitalists, but if you have the market, and the market is competitive, and you have the butcher, the baker, and the brewer - the three professions that Adam Smith mentions in the Wealth of Nations - and each one of them looks after themselves, they will provide the community with the best bread, the best beer, and the best meat at the lowest prices, not because they care for the public, but it is the best way to look after themselves and in looking after themselves, they look after the public interest in the best possible way. In other words, the public interest is best served when no one is trying to serve it. That was the original story for legitimizing capitalism.

The notion of competitive capitalism that Adam Smith was referring to died around 1870 or 1880 at the time when electromagnets were used for the second industrial revolution to create telegraph systems, later with Edison, electricity. Those companies could not be competitive. They were monopolies. So the idea of the brewer, the baker, and the butcher goes and is replaced by Edison, by General Electric, by Ford, today by Google, Facebook, Amazon and so on. That is not competitive capitalism. It is a market of monopolies.

Because the companies are huge, they need a lot of money to finance them. So the banks consolidate. So you have megabanks and megacompanies.

The way in which monopoly capitalism evolved created socialism for the bankers and for the very rich and the arena of the unfettered market for the many. So for the very few, when they have profits, it is their profits. When they have losses, society has to give them money. This is not even working now.

18 trillion dollars of debt is now receiving negative interest rates. That is a symptom that there is something spectacularly wrong with capitalism.

While our job is not to save capitalism for the capitalists, our job is to stabilize capitalism and use its stabilization as a foundation on which to build an alternative to capitalism.

Then we can start having the second conversation. What comes after capitalism? What will post-capitalism look like?

The myth is that wealth is produced individually by the private sector and the state comes and taxes it so the state is the bad guy that comes and takes money away from the privateers that produce things. That’s not how the world works. We all produce value together collectively, but then some very smart and powerful privateers tax it and they become the oligarchs.

This has a touch screen. It’s got a GPS system. It has a Wifi system. Everything I just mentioned was produced by the state.

Today, anything you go onto your Google search engine and you search for something, you add to the capital of Google. When you carry your phone with you when you are driving, then Google maps knows how many people are on every street, so it makes it red. The app becomes more useful to you because you know where it is congested. So people are contributing to the capital stock of Google. In other words, we are producing capital collectively but it is only Google that gets the profits.

So what we are proposing is something very simple.

We propose that every company should contribute 10% of its shares to a welfare fund that collects dividends and the dividends are then divided to every citizen. At first, the money that trickles down to each one of us is going to be very little. But the more production is automated, the more robots are utilized, the higher the revenues and the dividends of these companies, the more money goes to the people. And if we start at 10%, we can push it to 20%, 30%, and think about it, the limit is 100%. That is communism without a state, communism without communists, Star Trek. We all own the machinery, the machinery works for all of us, and we can all sit around here and have philosophical discussions.

Comments (1)
No. 1-1
JJ Sparrow
JJ Sparrow

There is not a country in the world that uses "Free Market Capitalism"

Almost all countries allow private banks to privilege of credit creation and lending.
All major economies will provide ball out's and ball in's to banks & select winners in commerce via subsidies, tax avoidance (dictionary says avoidance is evasion).

What would be the solution to a better world?

A credit and resource based system.

All major countries have a pension or retirement fund.

This is existing credit earned by workers.

I'll use my home country Australia for example.

This money could go to fund government and all essential or important non-government expenditure for the production of goods, services and assets.

The retirement funds in Australia are several trillion. If this money was used to cover major corporate expenses, government expenses and home lending, there would be non-inflation.

If a return of 5-15% was offered on Home Lending Bonds, Business Operation Bonds and Government Infrastructure Bonds, then the retirement funds would be topped up with the profits from money lent.

This doesn't avoid the growth part.

There is a limit to growth, it's based on population, the capacity to feed itself with fresh food and maintain itself and a vibrant and clean natural environment.

A full inventory is required from each country to determine the amount of non-renewable resources (any replacements with renewable) and renewable productivity capacities to sustain itself.

Corporates would be financed by retirement funds and in turn finance the areas of protection, production, provisions, peace, prosperity and progress.

All these workplaces in these areas would be run as a Co-op. A joint partnership between a Co-op and Board of Directors and a Corporate Body that provides finance and other highend technical and owns the hard assets.

If the workers owned the site, equipment and materials to produce and provide, they would be in the best position to determine safety, operations, renumeration packages. Would share the profits and decide on optimization or improvements, upgrades, efficiencies.

Since they are the workers, a slice goes into the retirement funds to continue to provide existing credit for future finance.

The Corporates get a cut from the lending and remuneration packages (aswell as established bonuses for success). They would own the hard assets which would be leased to the Co-ops. This ensures incentive at all levels.

It is up to government to determine the population and capacity limits of a country. Once identified a limit on migration and policies to deal with birth rates would be required.

There would only need to be 3 taxes for this.

A transaction tax to control inflation; All though once the use of existing credit is underway, inflation should disappear with this tax sitting at 0.00%

A Revenue Tax for all incomes at maximum of 5%; This is used to improve conditions and ensure a basic income exists by supplementing people that are able to contribute and caring for those that cannot.

A Land Value Tax; This is a rent on land to encourage more vertical living habitats. God's not creating anymore new land. If populations continue to spread across valuable arable land or into protection nature spots, more degradation and climate conditions will continue. If we are able to use tech like magnetic lev trains, we could split population up to have livable habitats from 20,000 to 100,000 on ground that is not farmable or is poor in conditions for live (waste lands).

We can transfer people and resources to the habitats and allow the good land for production and nature.

This cannot be done at the moment as stupid rules the roost.

The New Stories